China introduced rules for overseas investment of state-owned companies

Almaty. August 3. Silkroadnews – China has introduced rules for overseas investment of state-owned companies, the Malaysian information portal “The Star” reported.
“China’s finance ministry has issued guidelines on overseas investment of state-owned enterprises (SOEs), amid a campaign to tighten controls on outbound investment and financial risks”, the report said.
It is noted that “China’s giant SOEs making products from trains to chemicals have been leading the country’s “go out” drive with growing overseas investments, but they have encountered low returns on investment and weak profitability”.
The new rules, as expected, will help to strengthen the financial management of overseas investment of the state-owned enterprises, prevent financial risks and raise investment efficiency.
According to the publication, China is increasingly closely watching the overseas spending by both private and public companies in view of the growing concern about the growth of debt and the threat of potential systemic financial risks.
The guidelines, which will come into effect in August, cover such areas as investment decision-making, financial management, costs control, dividend distribution and foreign exchange sector.
Among the reasons behind low investment return are inability of state enterprises to manage the overseas investments and a lack of accountability of these enterprises’ senior officials.
The large overseas investment of the Chinese state-owned enterprises is a part of Beijing’s “One Belt, One Road” initiative.